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This is no conflcit
Indeed many Companies do this
What will need to happen is on the annual accounts it will need to say that ABC was invoiced from Company X,Y,Z who is a Director of ABC Ltd
But yes it is quite common
A Director of X,Y,Z can invoice ABC instead of taking a dividend
Can I clarify anything for you about this today please?
Thanks for the prompt response. Is this still OK if the director of ABC Ltd, is also set up as an employee under PAYE within ABC Ltd?
Yes it is
As long as it is all open then it is fine
Does that help?
Yes - just a bit surprised. Sounds too good to be true. I assumed HMRC would frown upon this, and regard it as behaviour not in the best interests of the company (ABC Ltd).
By "Open", you mean as long it is declared on the annual accounts?
Yes that is correct
Can I clarify anything else for you?
Not for a minute doubting the validity of your response, but can you point me to the best online source that formally articulates the legality of this. It would be a useful document to assist in discussions with my co-directors.
Many thanks for your help
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Hi I've been away for a few days so sorry for the delay. I am getting conflicting opinions on this subject, both from individuals and other online documentation. See this link for an example of where this seems to be something HMRC would frown upon - http://www.greenaccountancy.com/services/i-am-a/director/
In particular, the statement "However any work that is of the nature of acting as a director cannot be invoiced and any type of work that you don't already have a business in cannot be invoiced". As a Director of ABC Ltd, the work I do is the same as the work I do as Director of my own company XYZ, which would seem to me to be the first scenario in the aforementioned statement, thus making invoicing ABC illegal?
ABC and XYZ can invoice each other. if ABC contracted the services of XYZ to run and direct the company this would be legal
Does that clarify?
Not quite - it is not Director related duties. ABC wants to contract the services of XYZ (IT consultancy) to do the work that ABC is contracted to do for the client. As the same person, it would be the Director of XYZ doing the work rather than the Director of ABC. Still OK?